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Airlines tumble on Paris attack as Asia stocks retreat

Hong Kong - Asian markets mostly fell on Monday following the deadly weekend terror attacks in Paris - with airline stocks taking a beating on concerns over the tourism industry.

The late-night assault on Friday in the French capital, which killed 129 people, also sent the euro tumbling on fears for security in Europe and its effect on the already struggling eurozone economy.

Meanwhile, the Paris stock market sank since the attack, with travel and leisure companies hit by demand worries, dealers said.

In opening deals, the CAC 40 index of top French companies dived 1.1% to 4 756.92 points, before pulling back slightly.

Frankfurt's DAX 30 slid 0.93% to open at 10 609.14 points compared with Friday's close.
In initial deals, London's FTSE 100 fell 0.61% to 6 080.83 points.

It added to uncertainty in already nervous markets, which ended last week on a low owing to increasing worries about the state of the global economy.

While losses rippled across Asian stock markets, airlines were among the worst hit.

Japan Airlines sank almost 3% and rival ANA was 3.5% off, while in Sydney Virgin Australia plunged 6.5%. Indonesian flag carrier Garuda fell 1.3%.

In Shanghai there was a big selling in China Eastern Airlines, Air China and China Southern Airlines, while tourist firms also retreated, with China CYTS Tours Holding and China International Travel Service each down more than 1%.

"There will definitely be a negative psychological impact in the short term in tourism-related sectors. Airlines are particularly affected," Zhang Qi, a Shanghai-based analyst with Haitong Securities, told Bloomberg News.

The situation in France is "still quite uncertain now, so investors seem to be broadly risk-off today."

Regional stock indices were also mostly lower, with Hong Kong 1.6% off in the afternoon, while Tokyo fell more than 1% and Sydney gave up 0.9%.

"There is no doubt that the attacks in Paris will contribute to short-term investor nervousness," Shane Oliver, Sydney-based strategist at AMP Capital Investors, said.

However, he said he expected the Paris-linked losses to be brief and pointed out that markets had bounced back from initial selling following past terror attacks.

Euro selling

Selling also hit the euro, which was already under pressure from expectations the European Central Bank will loosen monetary policy to shore up the eurozone. High-risk emerging market currencies such as the South Korean won and Indonesian rupiah also fell as investors looked for safer bets such as the dollar and yen.

The search for lower risk also saw a jump in the price of gold.

Adding to selling pressure in Tokyo on Monday was data showing the Japanese economy had slipped into recession for the second time in three years, throwing into question the government's much-vaunted drive to kick-start growth and inflation.

The news comes as the central bank prepares for a policy meeting this week.

The soft results continue to flow despite Prime Minister Shinzo Abe's big-spending three-year plan - dubbed "Abenomics" - to revitalise the torpid economy and end years of debilitating deflation.

Taro Saito, director of economic research at NLI Research Institute, told AFP: "Companies are reluctant to invest despite their sound profits." He added that while consumer spending improved "its overall trend still remains weak".

In China, authorities doubled the deposit required for investors to borrow funds to trade stocks - known as margin trading - as they try to limit a practice that led a massive market bubble and summer rout.

The minimum requirement for margin trading was hiked to 100% from 50%, meaning traders must have the same level of funds in their accounts as the amount they want to borrow.

Margin trading was behind a stock market rally that sent the Shanghai index up 150% in a year, before it crashed in June.

The move comes as Shanghai rebounds from the summer volatility, with the benchmark index now up 22% from its August low. On Monday it reversed early losses to end the day 0.7% higher.

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